Questions and Answers of Accounting What The Numbers Mean

The following is a portion of the current asset section of the balance sheets of HiROE Co., at December 31, 2023 and 2022:Required:a. Describe how the allowance amount at December 31, 2023, was most
The following is a portion of the current assets section of the balance sheets of Avanti’s, Inc., at December 31, 2023 and 2022:Required:a. If $9,100 of accounts receivable were written off during
Branson Co. received its bank statement for the month ending May 31, 2022, and reconciled the statement balance to the May 31, 2022, balance in the Cash account. The reconciled balance was determined
A portion of the current assets section of the December 31, 2023, balance sheet for Carr Co. is presented here:The company’s accounting records revealed the following information for the year ended
A portion of the current assets section of the December 31, 2022, balance sheet for Gibbs Co. is presented here:The company’s accounting records revealed the following information for the year
Mower-Blower Sales Co. started business on January 20, 2022. Products sold were snow blowers and lawn mowers. Each product sold for $1,400. Purchases during 2022 were as follows:The December 31,
The following data are available for Sellco for the fiscal year ended on January 31, 2023:Required:a. Calculate cost of goods sold and ending inventory under the following cost flow assumptions
The inventory records of Kuffel Co. reflected the following information for the year ended December 31, 2022:Required:a. Assume that Kuffel Co. uses a periodic inventory system. Calculate cost of
In 2019, Trader Co. acquired a parcel of land for a cash purchase price of $175,000 with the intention of building a retail store in the near future. In late 2020, in the midst of the COVID-19
In Exercise 1.1, you were asked to obtain the most recent annual report of a company that you were interested in reviewing throughout this term.Data from in Exercise 1.1The balance in Happ Inc.’s
Stucki Holdings Corp. incurred the following expenditures: $5,700 cost to replace the transmission in a company-owned vehicle; $19,300 cost of annual property insurance on the company’s production
Gandolfi Construction Co. purchased a CAT 336DL earth mover at a cost of $1,200,000 in January 2022. The company’s estimated useful life of this heavy equipment is 10 years, and the estimated
Refer to the information presented in Mini-Exercise 6.4. Assume that Gandolfi Construction Co. calculated depreciation expense for the CAT 336DL earth mover on the straight-line method and reported
Creations Unlimited purchased camera equipment for its photo studio on January 6, 2022, at a cost of $17,000. The equipment had a four-year useful life and an estimated salvage value of $3,000. The
Backstreets Co. recently acquired all of Jungleland Inc.’s net assets in a business acquisition. The cash purchase price was $9.4 million. Jungleland’s assets and liabilities had the following
Dorsey Co. has expanded its operations by purchasing a parcel of land with a building on it from Bibb Co. for $310,000. The appraised value of the land is $105,000, and the appraised value of the
For each of the following expenditures, indicate the type of account (asset or expense) in which the expenditure should be recorded. Explain your answers.a. $22,000 annual cost of routine repair and
Alpha Inc. and Beta Co. are sheet metal processors that supply component parts for consumer product manufacturers. Alpha has been in business since 1985 and is operating in its original plant
Prepare an answer sheet with the column headings that follow. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on assets, liabilities, and
Millco Inc. acquired a machine that cost $1,800,000 early in 2022. The machine is expected to last for eight years, and its estimated salvage value at the end of its life is $180,000.Required:a.
Using a present value table, your calculator, or a computer program present value function, calculate the present value ofa. A car down payment of $16,000 that will be required in two years, assuming
Assume that fast-food restaurants generally provide an ROI of 10%, but that such a restaurant near a college campus has an ROI of 16% because its relatively large volume of business generates an
Early in January 2022, Tellco Inc. acquired a new machine and incurred $100,000 of interest, installation, and overhead costs that should have been capitalized but were expensed. The company earned
Grove Co. acquired a production machine on January 1, 2022, at a cost of $720,000. The machine is expected to have a four-year useful life, with a salvage value of $120,000. The machine is capable of
Freedom Co. purchased a new machine on July 2, 2022, at a total installed cost of $198,000. The machine has an estimated life of five years and an estimated salvage value of $27,000.Required:a.
Porter Inc. acquired a machine that cost $720,000 on October 1, 2022. The machine is expected to have a four-year useful life and an estimated salvage value of $80,000 at the end of its life. Porter
Moyle Co. acquired a machine on January 1, 2022, at a cost of $1,500,000. The machine is expected to have a five-year useful life, with a salvage value of $300,000. The machine is capable of
The balance sheets of Tully Corp. showed the following at December 31, 2023 and 2022:Required:a. If there have not been any purchases, sales, or other transactions affecting this equipment account
The balance sheets of HiROE Inc. showed the following at December 31, 2023 and 2022:Required:a. If there have not been any purchases, sales, or other transactions affecting this equipment account
Renter Co. acquired the use of a machine by agreeing to pay the manufacturer of the machine $7,500 per year for 10 years. At the time the lease was signed, the interest rate for a 10-year loan was
On January 1, 2022, Carey Inc. entered into a noncancelable lease agreement, agreeing to pay $21,000 at the end of each year for four years to acquire a new computer system having a market value of
Answer the following questions using data from the Campbell Soup Company 2020 annual report:Required:a. Find the discussion of Property, Plant, and Equipment and depreciation methods used by
On December 1, 2022, Hocking Inc. obtained a four-month working capital loan from its bank. The face amount of the note signed by the treasurer was $100,000. The interest rate charged by the bank was
On December 1, 2022, an advance rent payment of $25,800, representing a three-month prepayment for the months of December, January, and February, was received in cash from the company’s
For the payroll period ended on May 28, 2022, gross pay was $119,000, net pay was $91,000, FICA tax withholdings were $7,000, income tax withholdings were $17,000, and medical insurance contributions
The balance of the Estimated Warranty Liability account was $25,000 on January 1, 2022, and $34,400 on December 31, 2022. Based on an analysis of warranty claims during the past several years, this
Vicki Co. issued $1 million face amount of 8%, 20-year bonds on April 1, 2022. The bonds pay interest on an annual basis on December 31 each year.Required:a. Assume that market interest rates were
On July 1, 2022, $60 million face amount of 7%, 10-year bonds were issued. The bonds pay interest on an annual basis on June 30 each year. The market interest rates were slightly higher than 7% when
On May 15, 2022, Powell Inc. obtained a six-month working capital loan from its bank. The face amount of the note signed by the treasurer was $600,000. The interest rate charged by the bank was 7%.
On August 1, 2022, Colombo Co.’s treasurer signed a note promising to pay $2,400,000 on December 31, 2022. The proceeds of the note were $2,340,000.Required:a. Calculate the discount rate used by
At September 30, 2022, the end of the first year of operations at Lukancic Inc., the firm’s accountant neglected to accrue payroll taxes of $4,700 that were applicable to payrolls for the year then
Glennelle’s Boutique Inc. operates in a city in which real estate tax bills for one year are issued in May of the subsequent year. Thus, tax bills for 2022 are issued in May 2023 and are payable in
Kohl Co. provides warranties for many of its products. The January 1, 2022, balance of the Estimated Warranty Liability account was $25,100. Based on an analysis of warranty claims during the past
Prist Co. had not provided a warranty on its products, but competitive pressures forced management to add this feature at the beginning of 2022. Based on an analysis of customer complaints made over
Theater sells season tickets for six events at a price of $378. For the 2022 season, 1,200 season tickets were sold.Required:a. Use the horizontal model (or write the journal entry) to show the
Jessie Co. issued $3 million face amount of 9%, 20-year bonds on July 1, 2022. The bonds pay interest on an annual basis on June 30 each year.Required:a. Assume that market interest rates were
Alexi Co. issued $75 million face amount of 6%, 10-year bonds on June 1, 2022. The bonds pay interest on an annual basis on May 31 each year.Required:a. Assume that the market interest rates were
On August 1, 2014, Bonnie purchased $40,000 of Huber Co.’s 10%, 20-year bonds at face value. Huber Co. has paid the semiannual interest due on the bonds regularly. On August 1, 2022, market rates
On March 1, 2017, Catherine purchased $450,000 of Tyson Co.’s 10%, 20-year bonds at face value. Tyson Co. has regularly paid the annual interest due on the bonds. On March 1, 2022, market interest
Reynolds Co. issued $75 million face amount of 6% bonds when market interest rates were 5.81% for bonds of similar risk and other characteristics.Required:a. How much interest will be paid annually
The following summary data for the payroll period ended on July 14, 2021, are available for Brac Construction Ltd:Required:a. Calculate the missing amounts and then determine the FICA tax withholding
Atom Endeavour Co. issued $190 million face amount of 6.5% bonds when market interest rates were 6.71% for bonds of similar risk and other characteristics.Required:a. How much interest will be paid
On November 1, 2022, Gordon Co. collected $31,800 in cash from its tenant as an advance rent payment on its store location. The six-month lease period ends on April 30, 2023, at which time the
The following summary data for the payroll period ended December 27, 2021, are available for Cayman Coating Co:Additional information•For employees, FICA tax rates for 2021 were 7.65% on the first
Hayden Co. has outstanding $50 million face amount of 6% bonds that were issued on January 1, 2015, for $50,750,000. The 20-year bonds mature on December 31, 2034, and are callable at 102 (that is,
Hurley Co. has outstanding $420 million face amount of 9% bonds that were issued on January 1, 2010, for $409,500,000. The 20-year bonds mature on December 31, 2029, and are callable at 102 (i.e.,
On January 1, 2022, Drennen, Inc., issued $6 million face amount of 10- year, 14% stated rate bonds when market interest rates were 12%. The bonds pay semiannual interest each June 30 and December 31
The balance sheet caption for common stock is the following:Required:a. Calculate the dollar amount that will be presented opposite this caption.b. Calculate the total amount of a cash dividend of
On January 1, 2022, Learned, Inc., issued $105 million face amount of 20- year, 14% stated rate bonds when market interest rates were 16%. The bonds pay interest semiannually each June 30 and
Altuve Co. was incorporated on January 1, 2022, at which time 250,000 shares of $1 par value common stock were authorized, and 110,000 of these shares were issued for $17 per share. Net income for
Bill & Lisa Ltd. did not pay dividends on its 6.5%, $100 par value cumulative preferred stock during 2021 or 2022. Since 2015, 275,000 shares of this stock have been outstanding. Bill & Lisa
Assume that an investor owns 1,900 shares of $10 par value common stock and the company has a 5-for-1 stock split when the market price per share is $108.Required:a. How many shares of common stock
Assume that you own 400 shares of common stock of a company, that you have been receiving cash dividends of $5 per share per year, and that the company has a 2-for-1 stock split.Required:a. How many
On April 10, 2022, Amelia Inc. purchased 1,800 shares of its own common stock in the market for $23 per share. On September 28, 2022, the company sold 700 of these shares in the open market at a
From the following data, calculate the Retained Earnings balance as of December 31, 2023: Retained earnings, December 31, 2022 $346,400
From the following data, calculate the Retained Earnings balance as of December 31, 2022: Retained earnings, December 31, 2023 Net decrease in total assets during 2023 Net increase in
The balance sheet caption for common stock is the following:Required:a. Calculate the dollar amount that will be presented opposite this caption.b. Calculate the total amount of a cash dividend of
Calculate the annual cash dividends required to be paid for each of the following preferred stock issues:Required:a. $2.25 cumulative preferred, no par value; 600,000 shares authorized, 525,000
Rosie Inc. did not pay dividends on its $3.50, $50 par value, cumulative preferred stock during 2021 or 2022, but had met its preferred dividend requirement in all prior years. Since 2017, 38,000
Net income was $84,200; accounts receivable increased by $17,600; inventory decreased by $12,100; proceeds from the issuance of common stock were $22,500; accounts payable decreased by $7,400;
Dedrick Inc. did not pay dividends in 2021 or 2022, even though 60,000 shares of its 7.5%, $50 par value cumulative preferred stock were outstanding during those years. The company has 900,000 shares
O’Garro Inc. has paid a regular quarterly cash dividend of $0.60 per share for several years. The common stock is publicly traded. On February 27 of the current year, O’Garro’s board of
Assume that an investor owns 600 shares of $10 par value common stock of a company and the company has a 2-for-1 stock split when the market price per share is $90.Required:a. How many shares of
Assume that you own 900 shares of common stock of a company, that you have been receiving cash dividends of $3.15 per share per year, and that the company has a 3-for-2 stock split.Required:a. How
On March 3, 2022, Docker Inc. purchased 800 shares of its own common stock in the market at a price of $10.75 per share. On August 29, 2022, 500 of these shares were sold in the open market at a
On January 1, 2022, Metco Inc. reported 411,050 shares of $5 par value common stock as being issued and outstanding. On March 24, 2022, Metco Inc. purchased for its treasury 3,600 shares of its
Enter the following column headings across the top of a sheet of paper:Enter the transaction letter in the first column and show the effect (if any) of each of the following transactions on each
Enter the following column headings across the top of a sheet of paper:Enter the Transaction analysis—various accounts Enter the following column headings across the top of a sheet of paper: Enter
Pool Patrol, Inc. offers professional pool cleaning services to residential customers. The company cleans each pool that it services once per month throughout the year. Homeowners are billed for an
Net sales for the year were $600,000 and cost of goods sold was $426,000 for the company’s existing products. A new product is presently under development and has an expected selling price of not
Selling, general, and administrative expenses were $78,000; net sales were $520,000; interest expense was $11,600; research and development expenses were $61,400; net cash provided by operating
Net income was $388,500 for the year. Throughout the year the company had outstanding 5,000 shares of $6.50, $100 par value preferred stock and 80,000 shares of common stock.Required:Calculate basic
Net cash provided by operating activities for the year ended December 31, 2022, was $117,300. The cash balance on December 31, 2022, was $66,500. The net decrease in cash for the year was $38,000.
Big Blue University has a fiscal year that ends on June 30. The 2022 summer session of the university runs from June 1 through July 20. Total tuition paid by students for the summer session amounted
Kirkland Theater sells season tickets for six events at a price of $240. In pricing the tickets, the planners assigned the leadoff event a value of $60 because the program was an expensive symphony
If the ending inventory of a firm is overstated by $70,000, by how much and in what direction (overstated or understated) will the firm’s operating income be misstated?
MBI Inc. had sales of $900 million for fiscal 2022. The company’s gross profit ratio for that year was 37.5%.Required:a. Calculate the gross profit and cost of goods sold for MBI for fiscal 2022.b.
Mechforce, Inc. had net income of $151,800 for the year ended December 31, 2022. At the beginning of the year, 15,000 shares of common stock were outstanding. On April 1, an additional 10,000 shares
Mamba Metals, Ltd. reported net income of $573,650 for its fiscal year ended January 31, 2023. At the beginning of that fiscal year, 100,000 shares of common stock were outstanding. On October 31,
For each of the following items, calculate the cash sources or cash uses that should be recognized on the statement of cash flows for Baldin Co. for the year ended December 31, 2022:a. Sales on
The following information is available from the accounting records of Manahan Co. for the year nended December 31, 2022:Required:a. Calculate the operating income for Manahan Co. for the year ended
For each of the following items, calculate the amount of revenue or expense that should be recognized on the income statement for Pelkey Co. for the year ended December 31, 2022:a. Cash collected
The following information is available from the accounting records of Spenser Co. for the year ended December 31, 2022:Required:a. Calculate the operating income for Spenser Co. for the year ended
Franklin Co. has experienced gross profit ratios for 2022, 2021, and 2020 of 41%, 38%, and 40%, respectively. On April 6, 2023, the firm’s plant and all its inventory were destroyed by a tornado.
On April 8, 2022, a flood destroyed the warehouse of Marmaron Distributing Co. From the waterlogged records of the company, management was able to determine that the firm’s gross profit ratio had
The financial statements of Simon Co. include the following items (amounts in thousands):Required:a. Calculate the net cash flow provided by operations for Simon Co. for the year ended December 31,
The financial statements of Pouchie Co. included the following information for the year ended December 31, 2022 (amounts in millions):Required:Complete the following statement of cash flows, using
The following information is available from Bromfield Co.’s accounting records for the year ended December 31, 2022 (amounts in millions):Required:a. Calculate the net cash provided (used) by
Following are comparative balance sheets for Millco Inc. at January 31 and February 28, 2023:Required:Prepare a statement of cash flows that explains the change that occurred in cash during the
For the year ended December 31, 2022, Spike Inc. reported earnings per share of $6.30. During 2023, the company had a 3-for-1 stock split.Required:Calculate the 2022 earnings per share that will be

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